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Comcast Q4 Results a Mixed Bag

Comcast reported mixed subscriber results for the fourth quarter of 2005 and subdued guidance for 2006. North America's largest MSO added only 378,000 high-speed data (HSD) subscribers in Q4, down from 437,000 in Q3, bringing its year-end total to 8.5 million. While its HSD growth slipped, Comcast generated $1.1 billion from its Internet customer base in Q4. Turning to IP telephone, the MSO added 134,000 Comcast Digital Voice customers in Q4, brining its total to 202,000 at year end. Comcast Digital Voice was available to 16 million homes in 25 markets at the close of 2005, including Boston, Chicago, Seattle and Atlanta. Comcast fared well in digital video, adding 342,000 customers in Q4, up from 307,000 in Q3, bringing its year-end total to 9.7 million. Basic cable turned around too, as Comcast added 40,000 customers in Q4, compared to a loss of 46,000 in Q3. Investors were pleased to see Comcast bounce back in video and finally begin ramping its IP phone service rollout. However, mediocre HSD results and conservative guidance for 2006 dampened enthusiasm. Comcast projected only 9-10% revenue growth for its cable division in 2006, well below the 13% growth rate targeted by Time Warner Cable and the 15-16% reported in recent quarters at Cablevision, noted investment bank Sanford C. Bernstein & Co. Comcast blamed the shortfall on the switched phone business it inherited from AT&T. Sanford Analyst Craig Moffett is skeptical. "These slower-than-peer growth rates can only partially be attributed to the 'drag' of their legacy circuit switched voice business. Slightly slower-than-expected video ARPU growth is likely also a cause."
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